With, at best, 20 House seats, Republicans won’t be able to force big cuts in the budget in 2021, regardless of how the Senate organizes. So Republicans have to make a choice. Do they cut the dividend to the bone, or do they raise revenue? It’s one or the other.
If Republicans decide to defend the dividend, where should the revenue come from, the people or the oil companies? That should be an easy choice. The oil companies have had it soft in Alaska for a very long time, for 40 years, in fact. It’s time the entire oil tax regime in Alaska is given a fresh look.
All the players in Alaskan oil should be invited to Juneau, and asked, “What’s the fairest, most efficient, and least discouraging way for the State to get the revenue it needs?” This is a conversation that is long overdue.
The oil industry took over the State Senate in the mid-80’s, in the person of Senate President Jan Faiks. They have had outsized influence in the legislature ever since. If the Republicans don’t bring them to the table, the Democrats will.
When the industry says they’ll no longer invest in Alaska, it’s bullfeathers. Alaska is where the oil is. And Alaska is at the doorstep of a market the oil companies can exploit.
That market is Japan, our most important ally in the world. China is our geopolitical foe, and Japan, that great big floating aircraft carrier of a nation, is the first line of defense. Valdez is as close to Yokohama as it is to Long Beach, so it makes perfect economic sense for Alaskan oil to be sold there.
Japan, South Korea, Taiwan and Vietnam are China’s neighbors, and are thus critical to containing it. All are now dependent on Mideast oil, and they are nervous about it. Saudi Arabia and Iran are headed to war, sooner or later, and when that war comes the Strait of Hormuz closes.
All these countries would rather have good, safe, reliable American oil, and they will pay a premium for it. Alaskan oil is thus more valuable than any other oil in North America.
So the oil companies aren’t leaving Alaska. Alaskan oil must be developed as a matter of national security. If China’s neighbors are dependent on Alaskan oil, they are client states, and natural partners, and close allies.
Republicans want every well drilled in this state that makes economic sense. Because Alaska is so strategically located, it will still make sense even if a modest increase in revenue flows to the state.
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